migros ticaret a.Ş....sales in 2016 3 robust domestic growth of 22.9% in 4q 2016 and 19.7% in fy...
TRANSCRIPT
Migros Ticaret A.Ş.
2016 Financial Results
Disclaimer Statement
1
Migros Ticaret A.Ş. (the “Company”) has prepared this presentation for the sole purpose of providing information about its business, operations and financial results.
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Sales
CONTENTS
Guidance
2
Expansion
Format
Summary
Key Financial
Metrics
Financial
Results
Ataşehir Migros
Market Share
Evolution
Financial
Overview
Sales in 2016
3
Robust domestic growth of 22.9% in 4Q 2016 and 19.7% in FY 2016
Consolidated sales reached TL 11,059 million in 2016, with an increase of 17.8% versus last year,
Accelerated sales growth in 2016, driven by increased competiveness and household penetration
Sales Growth in 4Q16 22%
Sales Growth in 2016 17.8%
Sales (TL million)
11,059
9,390
2015 2016
Sales (TL million)
2,901
2,378
4Q 2015 4Q 2016
Migros improved its market share by 60 bps in modern FMCG
market in 2016 over a year ago.
Migros accounts for 14.4% of FMCG sales in modern FMCG
market and 5.7% market share in total FMCG in Turkey
Market Share Evolution
Note : Modern FMCG market and total FMCG market include all food-retail formats FMCG stands for Fast Moving Consumer Goods
Note 2:Nielsen data coverage expanded for 2015 and 2016, therefore FMCG market universe expanded accordingly
Source: Nielsen, Company data 4
2015 2016
In total FMCG market In modern FMCG market
Migros Market Share (%)
13.8% 14.4%
5.5% 5.7%
FMCG Market Share Evolution Domestic Sales Growth of Migros
2014 2015 2016
Domestic Sales Growth
Migros’ Domestic Sales Growth Y-o-Y (%)
14.6%
16.6%
19.7%
Market share gain in 2016 60 bps
Market share in total FMCG 5.7%
5
Expansion
New store openings in 4Q16 38
New store openings in 2016 232
Number of Stores as of 2016 1,605
Net Sales Area Split By Banner - 2016
Small/mid/large supermarkets
Compact hypermarkets
Mid/large supermarkets
Mid/large supermarkets
and hypermarkets
2016 Sales area : 1,079K sqm Cons. Avg. growth: 6.6%
2014 2015 2016
Number of Stores - Total
1,190
1,410
1,605
+220
+195
6
Solid Gross Profit Generation
Consolidated Gross Profit in 2016
Gross profit grew by 17.3% y-o-y to TL 2,962 million in 2016,
Despite heavy investment on pricing in 4Q 2016, gross profitability was maintained on yearly
basis
Gross Profit (TL million)
2,962
2,526
2015 2016
Quarterly Gross Profit (TL million)
757
649
4Q 2015 4Q 2016
Gross margin in 4Q 2016 26.1%
Gross Margin in 2016 26.8%
Margin 26.8% 26.9% Margin 26.1% 27.3%
7
Consolidated EBITDA(R) in 2016
Solid EBITDA(R) Generation
*EBITDA(R)= Operating Profit+Amortization+Employee Termination Benefits +Unused Vacation Provision-Other Income+Other Expenses+(Rent Expenses)
EBITDA rose by 14.0% and reached TL 686 million, in spite of staff cost hike in 2016
EBITDAR increased by 14.5% y-o-y in 2016, thanks to effective opex management
EBITDA* (TL million)
Margin 6.2% 6.4%
686 602
2015 2016
Quarterly EBITDA* (TL million)
Margin 5.8% 6.3%
4Q 2015 4Q 2016
167 149
EBITDAR* (TL million)
Margin 11.2% 11.5%
1,240 1,082
2015 2016
Quarterly EBITDAR* (TL million)
Margin 10.8% 11.6%
4Q 2015 4Q 2016
313 275
Key Financial Metrics
Accelerated growth, where EBITDA margin sustained
2014 2015 2016
Consolidated EBITDA Margin (%)
6.5% 6.4% 6.2%
Sustainable EBITDA margin: 6.0-6.5%
Stable Negative Cash Conversion
2014 2015 2016
Domestic operations Working Capital in days
- 38 days
-38 days
-37 days
2014 2015 2016
3.2x
2.9x 2.7x
Consolidated Net Debt / EBITDA
Strong EBITDA generation was the driver of the improvement
2014 2015 2016
Domestic Sales Growth Y-o-Y (%)
14.6% 16.6%
19.7%
8
9
Competition Board permission : Feb. 09, 2017
Migros acquired 95.5% of Tesco Kipa shares on March 01,
2017 with the price per share of TL 0.15638*
3Q 2016 LTM Sales : TL 2.3 billion
Store Portfolio (168 stores)
− 17 Hypermarkets >6,000 sqm
− 31 Large Supermarkets between 2,000 and 6,000 sqm
− 48 Supermarkets
− 72 Express stores
37 retail real estate properties (mainly shopping malls,
Company owned)
Centrally located distribution centre in Torbali, İzmir
(owned property)
Summary Business Overview Net Sales Area
~320k sqm
Hypermarkets 39%
Large Supermarkets
43%
Supermarkets 13%
Express 5%
Inorganic Growth Overview of Tesco Kipa
*subject to the final pricing adjustments based on Kipa’s independently audited and finalized closing balance sheet dated 28.02.2017
10
Summary Business Overview
Inorganic Growth Acquisition of Tazedirekt
Acquisition of Tazedirekt, online fresh & natural food products service
Important technology investment, which set the course for a pioneering online sales development of fresh and natural food product categories
Tazedirekt will start as a stand-alone operation in March 2017. A combination of Macroonline and Tazedirekt operations in the near future is under consideration.
Taze Direkt
is reloaded....
Natural
Fresh Organic
Healthy
Performance Indicator
2014 2015 Target 2016 Performance vs Guidance
Expansion Program (Number of NEW Stores)
199 257 220+ 232
Top-Line Sales Growth 14.0% 15.6% Double Digit 17.8%
EBITDA Margin 6.5% 6.4% 6.0-6.5% 6.2%
Performance Summary & Expectations
11
Number of stores reached 1,605 as of 2016. The company opened more than 1,000 new stores in the last 5 years.
.Sales growth* : 15-18%
.EBITDA Margin* : 6.0-6.5%
.Expansion target : 120-150 new stores
2017 Guidance for Migros excluding Kipa operations
Performance Summary
*Expectations excluding consolidation of 10 months Kipa results in 2017
Expectations and Guidance
12
Domestic sales growth doubled in 3 years thanks to long-term
effective strategies (2013 Growth: 10.2%, 2016 Growth: 19.7%)
Dilutive impact of employee cost and rent cost increases minimized in 2016 thanks to opex control and strong sales performance,
Kipa acquisation is expected to support Migros’ long term growth and create shareholder value
Financial results of Kipa between (Mar 01 and Dec 31) will be consolidated into Migros results in 2017
• 30-35% Consolidated Sales growth*
• 120-150 new stores Expansion target
• 5.0 – 5.5 % (Full year range)
Consolidated EBITDA Margin*
Management Message
2017 FY Guidance including Kipa
*Including consolidation with 10 months Kipa results
- Operations
Financials & Format Summary
- Financials
IFRS Consolidated Income Statement Summary
SUMMARY OF INCOME STATEMENT – 2016
14
Net Sales 11,059.2 9,389.8
Cost of sales -8,097.7 -6,864.2
Gross Profit 2,961.5 2,525.6
Operating Expenses -2,525.0 -2,154.3
Other Operating Income / (Expense) -96.4 -107.7
Operating Profit 340.2 263.6
Income / (Expense) from Investment activities -43.1 -210.1
Operating Income Before Finance Income / (Expense) 297.1 53.5
Financial Income / (Expense) -524.2 -399.5
Income/Loss Before Tax From Continuing Operations -227.1 -346.0
Tax Income / (Expenses) -72.4 -67.3
Deferred Tax Income 6.5 42.9
Net Profit / Loss -292.9 -370.5
EBITDA 686.4 602.1
EBITDAR 1,239.8 1,082.4
(TL Million) 2016 2015
IFRS Consolidated Balance Sheet Summary
SUMMARY OF BALANCE SHEET – 2016
15
Current Assets 2,532.0 2,035.5
Non-current Assets 3,805.4 3,725.2
Total Assets 6,337.4 5,760.7
Current Liabilities 3,320.8 2,725.7
Non-current Liabilities 2,775.5 2,519.1
Total Liabilities 6,096.2 5,244.7
Equity 241.2 516.0
Total Liabilities and Equity 6,337.4 5,760.7
(TL Million) 2016 2015
Largest national supermarket operator
− Operates 1,605 stores across 73 cities in Turkey as well as in
Kazakhstan and Macedonia, as of December 31, 2016
− 14.4% market share in organized grocery FMCG retail sales in
Turkey¹
− Owns 95.5% of Kipa shares
Turkey’s largest integrated red meat facility providing for all
Migros stores
Consistent double digit sales growth2 since 2006,
underpinned by both new store openings and like-for-like
growth
“Best Retailer of the Country” award3, 13 years in-a-row
Complementary international operations
− Operates 39 stores and 2 shopping malls in Kazakhstan & Macedonia
− 20 years of retail experience abroad
Participant of Borsa Istanbul’s Corporate Governance and
Sustainability Indices
1 in 2016 Nielsen 2 excluding divested operations 3 Capital Business magazine
Migros Today
16
Since 1954
Number of stores: 1,512 including 417 5M, MMM & MM stores and 1,095
Migros Jet & M stores,
Penetration: 73 cities
─ (40*-4,500) sqm / (1,800* – 18,000) SKUs
─ Differentiated offering and service on fresh product categories
─ Wide branded assortment of FMCG products
─ Consistent Every Day Low Pricing on commodity Private Label products
─ Fashionable, complementary and seasonal non-food selection
Migros
Migros, Largest National Supermarket Chain
17
Focus on proximity supermarkets
578 Migros Jet and 517 M Migros
Proximity Stores, (40*-300) sqm,
1,800* – 3,000 SKUs
─ New avenue of expansion through collaboration with Petrol Ofisi
company to open forecourt stores in selected locations
CRM applications for different customer segments
─ Customized & Differentiated Offering for Money Club Card holders
─ Club Card Loyalty Program for 17 years
Loyalty Program
(*): including Migros Jet stores and Migros Jet 7/24 forecourt stores as of December 31, 2016
Macrocenter
Exclusive shopping
Penetration: 5 cities
Number of stores: 39
400 - 2,500 sqm / 10,000 SKUs
─ Upscale gourmet store serving with strong brand
loyalty
─ Wide product range in delicatessen, appetizers and
spirits. Premium quality in fresh products
─ Complementary and premium non-food
Customized service such as banquet ready meal delivery
18
Currently operating in 7 regions through dedicated sales team.
Dedicated warehouses and customer delivery
15 Wholesale stores
Penetration: 11 cities
19
Wholesale & Food Service
Focus on Horeca Penetration
Turkey’s first and leading e-commerce web site in food retail
Top-line growth is 2-3x higher
than the Company average
Improved operational efficiency through picking automation
Direct delivery from stores
(105 stores in 24 cities across
Turkey)
Online Business
20
Kazakhstan Macedonia
21
1.8% of consolidated sales from Kazakh operations
Number of stores: 19, including 3 hypermarkets, 15
supermarkets and 1 Macrocenter. Owns 1 shopping mall in Almaty
Total sales area of 34,716 sqm
─ Serving in the cities of Almaty, Astana, Aktau and
Atrau in a large country
Operates in multi-format since 1999
1.2% of consolidated sales from Macedonian operations
Number of supermarkets: 20
Owns 1 shopping mall in Skopje
Total sales area of 19,094 sqm
Operations started in 2005
International Operations
1 Shopping Mall 3 Hypermarkets 15 Supermarkets 1 Macrocenter
1 Shopping Mall 20 Supermarkets
22
JV Structure between BC Partners & Anadolu Group with 40.25% Migros shares each
Ownership Structure
Anadolu Endüstri Holding A.Ş. ("Anadolu") indirectly acquired 40.25% Migros shares through purchasing 80.50% of MH Perakendecilik ve T.A.Ş. in July 2015.
Corresponding transaction price is TL 26.86 per Migros share with
the closing day exchange rate,
BC Partners retains a "put option" and Anadolu retains a "call option" for 9.75% Migros shares to be exercised between May 01, 2017 and October 31, 2017.
Anadolu Group Operating in 9 different sectors in
19 countries with 61 production plants from the Atlantic to the Pacific
Exports to more than 80 countries
Current Shareholding Structure
Moonlight Capital S.A.
15.37%
MH Perakendecilik ve Ticaret A.Ş.
50.00%
Moonlight Capital S.A.
19.50%
Anadolu Endüstri
Holding A.Ş.
80.50%
Free Float
19.49%
Migros Ticaret A.Ş
Kenan Investments S.A.
15.13%